Amazon's $8.45 billion purchase of MGM Holdings may only be the beginning, according to S&P Global Market Intelligence's Katie Arcieri.
Arcieri writes that retail analysts say Amazon could be eyeing other movie studios to further bolster its streaming library. If approved, the deal for MGM Holdings, which operates the studio Metro-Goldwyn-Mayer Inc, would add thousands of TV episodes and movies to Amazon's Prime Video library.
Two other deals—the move to combine AT&T Inc.'s Warner Media operations with Discovery and The Walt Disney Co.'s 2019 purchase of 21st Century Fox—puts pressure on Amazon to aggressively find studios, according to Dan Romanoff, an analyst with Morningstar.
"It wouldn't surprise me at all if they were looking at other properties, other studios as well," Romanoff told Arcieri. "If Amazon wants to remain a relevant player in live streaming video, they have to expand their content library."
Tuna Amobi, media and entertainment analyst with CFRA Research, told Arcieri that Amazon has the financial power to purchase other studios, such as Lions Gate Entertainment Corp.
The deal is Amazon's second-largest acquisition behind its 2017 purchase of Whole Foods Market for $14.62 billion. Usually, the company looks for smaller deals to bolster its current offerings, according to Romanoff.
Romanoff says content from MGM and future acquisitions would be used to keep its Prime members engaged. Eventually, this content could help the company justify price increases.
If movies are regularly released on streaming services, that could make platforms like Amazon Prime even more attractive to consumers. As movie theaters closed during the pandemic, streaming has gained even more momentum.
Indeed the pandemic clearly changed how we consume content, especially amid the widespread movie theater closures. Whether this will be a permanent trend and how that would affect movie studio real estate was a topic of a CBRE podcast last October.
Victor Coleman, CEO of Hudson Pacific Properties, one of the largest owners of studio and tech space, said last October that there was an open question around how motion picture companies will release content. In the future, Coleman wondered if studios might direct dollars into streaming videos or pay for play.
Hudson Pacific Properties owns an extensive media portfolio in Hollywood, which attracted the attention of Blackstone during the height of the pandemic last year. The private equity giant agreed to purchase a 49% stake in three Hudson studios and five Class A office buildings. Altogether the 2.2 million square feet of real estate was valued at $1.65 billion.
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